THE UNIVERSITY OF ZAMBIA

SCHOOL OF LAW

NAME :TANAKA MAUKA

COMPUTER No.:2020085843

LECTURER :MR C. CHUNGU

COURSE CODE :LPR2920

DUE DATE :10/05/22

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1.It is therefore for the purpose of advising Raymond Car limited and Pilato on
important contract law issues that emanate from their story ,that this paper comes into
play.This will be done in a clear and comprehensive step by step process,starting by
identifying key contract law issues,going through the identification and outlining of
the applicable law and also through the analysis and application of the law to the facts
of the story.Finally,taking into consideration everything that will have been brought
up,this paper will conclude.

The pertinent contract law issues that arise from Raymond Car limited and Pilato's
story are as follows:

 Whether Raymond Car limited's advertisement of a second hand Prado in the

Daily Nation Newspaper of 1st April 2022 amounts to an offer.

 Whether Sakhile's response to Pilato's enquiry ,stating that Raymond Car limited
believed the car was worth ZMW400000 amounted to an offer.

 Whether Pilato's reply to Sakhile's message,stating that he could only afford to

pay ZMW350000 amounted to an offer.

 Whether Sakhile's response to Pilato's message stating that he could only afford
to pay ZMW350000 by stating that the last price for the Prado was ZMW375000
amounted to a counter offer.

 Whether Sakhile's silence upon receipt of Pilato's message restating that he could
only afford to pay ZMW350000 amounts to acceptance.

Whether Raymond Car limited's advertisement of a second hand Prado in the

Daily Nation Newspaper of 1st April 2022 amounts to an offer.

Generally,an advert is not an offer but an invitation to treaty(Patridge v

Crittenden)1,which in some instances is meant to inform people that something is up
for sale(Harris V Nickerson)2.It is an appeal, usually to the public, to make offers on
certain goods or services.Advertisements in newspapers that someone has goods for

1
[1968] 2 ALL E.R. 421
2
[1872-73] L.R.8 Q.B.286

2
sale do not constitute offers but invitations to treat.They however constitute offers
when the advertiser demonstrates willingness to be bound by their advert,when they
are a unilateral offer (Carlill V Carbolic Smoke Ball Co)3.

In the case of Harris V Nickerson4 ,the court held that the advertisement was just a
declaration informing people that goods will be auctioned.The issue was whether the
advert placed by the defendant was an offer which the claimant accepted by
responding.It was found that the advert was not an offer to anyone who would accept
by perfomance as would be the case in unilateral contracts.For an advert to be
properly construed as an offer,there should be a declaration through the words of the
advertiser that they are willing to be bound by their advert.

Looking at the facts of the story between Raymond Car Limited and Pilato,the
advertisement placed in the newspaper by the earlier did not constitute an offer but
rather a declaration informing people that the Prado was up for sale.It is similar to the
story in Harris V Nickerson5 which we can use to conclude that the advertisement of
the Prado was not an offer because it did not show any intention on the part of the
advertiser to sell the vehicle to anyone.

Whether Sakhile's response to Pilato's enquiry about the vehicle,stating that

Raymond Car limited believed the Prado was worth ZMW400 000 amounts to an
offer.

Generally, price statements do not amount to offers (Harvey V Facey)6.They are just
meant to provide more information about the goods or services up for sale.They in
many instances do not display any willingness of the one who stated the price to
receive the amount from anyone therefore they can be taken to be invitations to treat
(Grainger V Gough)7.

In the case of Harvey V Facey8,the Privy Council held that there was no contract
between the parties.The issue was whether the defendant’s reply to the appellant by
stating the price amounted to an offer which the appellant accepted.The defendant had
3
[1893] 1 Q.B. 256
4
Ibid
5
Ibid
6
[1893] A.C. 552
7
[1896] AC 325
8
Ibid

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not replied as to whether they would sell the land to the appellants.The defendant
merely responded to the request for information and did not offer.There was no
evidence of the intention that the telegram sent by the defendant was an offer.

Applying the rule to the story of Pilato and Raymond Car Limited,it lays bare the fact
that Sakhile's statement that Raymond Car Limited believed the Prado was worth
ZMW400 000 did not amount to an offer but just an invitation to treat.Sakhile did not
show Raymond Car Limited's willingness to sell the car to Pilato in the event that he
agrees to buy it for ZMW400 000,of which it would have been an offer.That was also
the case in the story leading to the case of Harvey V Facey9.

Whether Pilato's reply to Sakhile's message stating that he could only afford to
pay ZMW350 000 amounted to an offer.

An offer is an expression of willingness to contract on specified terms (London

Ngoma and Others V LCM Co Ltd)10.This means it is an expression of willingness to
enter into a legally binding relationship(Finance Bank Zambia and Rajan Mathani V
Simataa Simataa)11.An offer is an act or conduct aimed at showing willingness to
enter into a legally binding contract which becomes binding on the offeror once it is
accepted(Galaunia Farms Limited V National Milling Company)12.

In the case of London Ngoma and Others V LCM Co Ltd13,the court argued that there
was a contract between the appellants and the defendants as a result of the appellants
accepting the offer that was presented to them by the defendants.The appellants hence
had the right to be notified with regards to the actions taken concerning the property
since they had paid deposits as per the defendant’s direction.In this case one of the
owners of a property offered the appellants the property and the appellants accepted
the offer.

In the story between Pilato and Raymond Car Limited,Pilato stated that he could only
afford to pay ZMW350 000,which according to all the requirements that are needed to
make up an offer,is an offer.It was sufficiently specific and comprehensive to be

9
Ibid
10
[2019] ZMCA 11
11
[2017] SCZ 21
12
[2004] ZR 1
13
Ibid

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capable of immediate acceptance.Pilato made it with an intention to be bound by mere
acceptance.Looking at the facts of the story and the rule applicable,it is safe to say
Pilato made an offer.

Whether Sakhile's response to Pilato's message stating that he could only afford
to pay ZMK350 000 by stating that the last price of the Prado was ZMW375 000
was a counter offer.

A counter offer arises when one party proposes an alteration of the terms of an offer
made to them in response to that offer (Hyde V Wrench)14.A counter offer means the
original offer was rejected and replaced with another one.A counter offer contains
new or altered terms as opposed to the terms found in the previous offer and the
previous offer will be struck off (Bigg V Boyd Gibbins)15.The parties,the offeror and
the offeree,may the settle on a contract with altered terms (Dangote Industries Zambia
Limited V Enfin Limited)16.

Hyde V Wrench17 is a classic case that involves a counter offer.It is in this case that it
is demonstrated that a counter offer makes the previous offer void and incapable of
being accepted.In this case the issue was whether there was a contract between Mr
Hyde and Mr Wrench.The court found that Mr Hyde made a counter offer therefore
could not accept the offer since it was made void and incapable of being accepted as
per the general rule.It is therefore important to note that when a counter offer is
made,the previous offer ceases to work.

Taking a look at the facts in the story of Pilato and Raymond Car Limited,Sakhile's
statement that the last price for the Prado is ZMW375 000 superseded the previous
offer that was made by Pilato of ZMW350 000.It makes the offer by Pilato void as it
cancels it and introduces a new term with regards to the price of the Prado.This is
evidence that the statement by Sakhile amounted to a counter offer since it satisfies all
requirements needed for it to be a counter offer as stipulated by the rule from the case
of Hyde V Wrench18.

14
[1840] Beav .334
15
[1971] 2 ALL ER 183
16
[2021] ZMCA 3
17
Ibid
18
Ibid

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Whether Sakhile's silence upon receipt of Pilato's message restating that he could
only afford to pay ZMW350 000 amounted to acceptance.

Acceptance is the assent to all the terms of an offer(Finance Bank Zambia and Rajan
Mathani V Simataa Simataa)19.It also needs to be unconditional.Acceptance needs to
be communicated(Adams V Lindsell).It can either be in writing,oral or by
conduct(Galaunia Farms Ltd V National Milling Company)20. As a general rule, if the
offeree remains silent in the face of an offer made, this cannot be interpreted as
acceptance(Felthouse V Bindley)21.

In the case of Felthouse V Bindley22,it was held that there was no contract between
the complainant and the nephew since the nephew did not communicate the
acceptance or decline of the offer made by the complainant to buy the nephew's
horse.The court argued that acceptance needs to be communicated,which was the case
in Adams V Lindsell23 where the court held that there was a valid contract since the
offeree accepted the offer the moment they placed the letter of acceptance in the Post
Office box.

Sakhile's silence after Pilato stated that he could only afford to pay ZMW350 000 did
not amount to acceptance.This is so because the general rule states that silence does
not mean acceptance.Also,in the case of of Felthouse V Bindley24 it was held that
there was no contract since the nephew remained silent after an offer to buy his horse
was made by the complainant.

Taking into consideration the facts of the story,the issues raised and the rules applied
this paper can conclude that there was no contract between Pilato and Raymond Cars
limited therefore no action can be taken .Raymond Car limited was not bound to sell
the vehicle to Pilato since there was no valid expression of assent to the agreement on
its part.

2.This academic paper aims at advising on the contract law issues arising from their
story.A clear,comprehensive and straightforward manner will be used to do so,starting
19
[2017] SCZ 21
20
[2001] ZR 1
21
[1863] 1 New Rep.
22
Ibid
23
Ibid
24
Ibid

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with raising the issues that arise from the story.This will lead to the second part where
the rule applicable to the facts of the story will be identified and brought up.The rule
will be applied and finally,taking a look at the facts of the story,the rules and their
applicability,a conclusion will be made.

The Contract law issues that arise from the story between Michael and MUNZA
Engineering Company are as follows;

 Did the MUNZA Engineering Co representative’s offer to pay ZMW100 000 to

Michael for the application amount to a valid offer?

 Did Michael’s rejection of the ZMW100 000 offer by the MUNZA Engineering
Co and statement that he will accept ZMW120 000 amount to a counter offer?

 Did MUNZA Engineering Co accept the offer as a result of their representative

giving money to Michael?

 Did Michael breach the contract as a result of him giving an application that is
not the best to MUNZA Engineering Co?

An offer is an expression of willingness to contract on specified terms, made with the

intention that it is to become binding as soon as it is accepted by the person to whom
it is addressed (Finance Bank Zambia and Rajan Mathani V Simataa Simataa)25.The
one who makes the offer is called the offeror and the one who is meant to accept the
offer is called the offeree.It is the offeror’s intention that is used to ascertain if a
certain piece is an offer or not(Boulton V Jones)26.An offer can be identified by the
words of the offeror that shows intention to contract on specified terms(Carlill V
Carbolic Smoke Ball Co)27.

Originally,courts used to determine if there was an agreement by ascertaining if there

was a meeting of minds.It is the intention of the offeror that is being looked t to
determine if their is an offer or not.By using an objective test ,if a reasonable person
believe that the offeror was willing to be bound, through the words of the offerer then
it will be deemed to be a valid offer.In the case of Carlill V Carbolic Smoke Ball

25
[2017] SCZ 21
26
[1857] 157 E.R. 232
27
[1893] 1 Q.B. 256

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Co28,it was held that the defendant’s advert amounted to an offer because they
displayed an intention to be bound by depositing a 1000 pounds in an Alliance Bank
account.

With the facts at hand regarding the story of Michael and MUNZA Engineering Co,it
can be noted that MUNZA Engineering Co through their representative made an offer
to Michael when they promised to pay ZMW100 000 for the application.This is
because MUNZA Engineering Co displayed an intend to be bound by their promise to
pay ZMW100 000 to Michael.Applying the objective test,any reasonable person will
realize that MUNZA Engineering Co was willing to be bound by their promise as was
in the case of Carlill V Carbolic Smoke Ball Co.It is therefore imperative to note that
what MUNZA Engineering Co made was an offer that would be binding on their part
once it was accepted by Michael.

A counter offer materialises when one party proposes a change or alters the terms of
the original offer (Hyde V Wrench)29.This susbsequently annulls the original offer
and it ceases to work as the parties work with an offer with new terms (Brogden V
Metropolitan Railway Co)30.The original offer becomes incapable of acceptance.The
roles of the offeror and offeree become reversed.

In the case of Hyde V Wrench31,the court held that there was no contract between Mr
Hyde and Mr Wrench.The issue of the case was whether there was a contract between
the two parties and whether if a counter offer is made,the original offer can still be
accepted or not.The court made it clear that where a counter offer suffices,the original
offer becomes void and can not be accepted thus in the case of Hyde V Wrench32,Mr
Hyde rejected the 1000 pound offer and counter offered with 950 pounds therefore
they could not backtrack and accept the 1000 pound offer since it was rendered void
the moment Mr Hyde counter offered with an offer to pay 950 pounds instead.

Applying the rule to the facts of the story between MUNZA Engineering Co and
Michael,it can be noted that Michael made a counter offer by rejecting the terms of

28
Ibid
29
[1840] 3 Beav . 334
30
[1877] 2 A.C. 666
31
Ibid
32
Ibid

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the offer made by MUNZA Engineering Co with regards to the amount that was to be
paid.They (Michael) rejected the ZMW100000 offer and counter offered with an offer
of ZMW120000.This counter offer preceded the offer made by MUNZA Engineering
Co that Michael could not accept it anymore in the event that he wanted to,according
to the Hyde V Wrench33 judgement that the original offer will not be available for
acceptance if there is a counter offer.It is therefore important to keep in mind that
Michael made a counter offer.

Acceptance is the assent to all the terms of an offer (Rating Valuation and others V
Lusaka City Council and others)34.An acceptance must correspond with the terms of
the offer,it must be unequivocal and unconditional or it will be invalid(Adams V
Lindsell)35.Acceptance is either done orally,in writing or by conduct (Smith V
Hughes)36.The acceptance of an offer should be communicated for it to be valid.Also
one can not accept an offer that they are not aware of.Silence generally do not amount
to acceptance (Felthouse V Bindley)37.

In the case of Smith V Hughes38,the reasonableness test was proposed.That is to say is

a party conducts himself in such a way that a reasonable man would apprehend that
the party is accepting an offer then it is to be taken as acceptance.It is through the
reasonableness test that a party’s conduct can be determined to be acceptance or not.If
it is found that a party has accepted the terms of the offer by the other party then a
contract suffices.If it is found that the conduct did not amount to acceptance then
there will be no contract.

As in the case of Smith V Hughes39,applying the reasonableness test to the facts in the
story of MUNZA Engineering Co and Michael,it can be ascertained that MUNZA
Engineering Co through its representative accepted the offer of ZMW120000 by
Michael when they agreed and paid the said amount despite them not signing the
contract.MUNZA Engineering Co accepted the offer by conduct,they proceeded to

33
Ibid
34
[2004] ZR 109
35
[1818] 1 B .& Ald. 681
36
[1870-71] L.R 6 Q.B 597
37
[1863] 1 New Rep. 401

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pay the amount stated by Michael ,which is the action in question that a reasonable
person would identify as acceptance.It is therefore imperative to note that MUNZA
Engineering Co accepted the offer by Michael.

In conclusion it is worth noting that there was a contract between MUNZA

Engineering Co and Micheal,judging from the facts of the story.This because there
was a valid expression of an offer and acceptance,an intention to enter into legally
binding relations and consideration.However,Michael presented an application that
was not as he described therefore MUNZA Engineering Co can approach the courts
and sue Michael for breach of contract.

Many at times parties to a contract agree on the amount that is to be paid by a party
that breaches the contract in question.This amount can fall into one of the two
categories namely liquidated damages and a penalty clause.The amount may be the
exact pre-estimate of the loss that is likely to be inflicted on one party upon cotract
breach,in which case it will be liquidated damages.The amount may come as a
security that there will be peformance with regards to the contract,in which case it
will be a penalty.A number of factors can be taken into account in the determination
of whether a sum is a liquidated damages or a penalty and they revolve around the
intention of the award.

It is a penalty if the amount is extravagant and way higher than the greatest amount of
loss that could follow as a result of the breach.That is to say if the amount stated in
the contract is too high in comparison with the amount that could be lost in the event
of breach of the contract then it is regarded as a penalty.This was also emphasized in
the case of Kemble V. Farren40 where it was held that 1000 pounds was too high as
compared to the actor’s daily charges of 3 pounds and the greatest amount of loss
possible and was therefore a penalty.

It is a penalty if the contract involves the payment of money and if the party fails to
pay the money,will have to pay a larger sum than they were supposed to pay.That is to
say if one party is supposed to pay a certain amount as part of their promise and they
fail to pay that particular amount then they will be required to pay a larger amount

40
[1829] Rep. 1234 130

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then it is regarded as a penalty.This was also emphasized by the House of Lords in the
case of Dunlop Pneumatic Tyre Company v New Garage and Motor Company41.

There is a presumption that a clause is a penalty when a single lump sum is made
payable upon the occurrence of one or more or all of several events, some of which
may occasion serious and others mere trifling damage.This means a clause is a
penalty if a sum is paid at once after certain phenomenon that cause serious and less
serious harm or loss take place.This amount is paid to the aggrieved party that would
have suffered loss as a result of the breach of the contract.

Where it is impossible to ascertain the pre-estimate of the consequence of the

breach,the lump sum to be paid is regarded as liquidated damages.The court will
regard the lump sum as the genuine pre-estimate and treat it as liquidated damages.A
classic case in this regard is the case of Law V. Redditch Local Board42 where a
descriptive definition of a liquidated damage was given,to say,if the intention is to
assess the damage done as a result of the breach then it is a liquidated damages.

The general rule with regards to damages is that they are not meant to put a party in a
better off position(C & P Haulage V. Middleton)43.It is therefore important to note that
any amount that will put the claimant in a better off position will not be awarded as
damages.A court can award an amount that is to be earned during the unexpired part
of a contract since it satisfies the general rule.It will not put the claimant in a better off
position but in a position they would be had the contract not have been breached.

In conclusion ,it is worth noting that there are a number of ways that can be used to
determine if a sum is a penalty or liquidated damages,as discussed.If an amount is
meant to return the claimant in a position they would have been had the contract not
been breached,then it is a liquidated damages and if it is extravagant and seem
punitive,then it is a penalty.Furthermore a court can award the amount that is to be
earned during the unexpired part of the contract as damages since it does not put the
claimant in a better off position but puts them in a position they would have been had
the contract not have been breached.

41
[1915] A.C. 79 [1914-15] All E.R. Rep. 739
42
[1892] 1 QB 127 (CA)
43
[1983] EWCA Civ 5

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